EUR/USD Forecast: Oil Shock and Middle East Tensions Continue to Weigh

Author: Fawad Razaqzada, Market Analyst

Date: March 12, 2026

Market Overview

The EUR/USD forecast is currently bearish due to escalating geopolitical tensions and surging crude oil prices. Recent comments from Mojtaba Khamenei regarding the potential continuation of the closure of the Strait of Hormuz as a strategic tool against adversaries have significantly impacted financial markets. This has led to a spike in oil prices, with Brent crude oil reaching the $100 mark, which has further pressured equity markets while bolstering the US dollar.

Impact of Rising Oil Prices

Higher energy prices are particularly detrimental to economies that are heavily reliant on energy imports, such as the eurozone. As Brent crude oil approaches the $100 threshold, the implications for inflation expectations, trade balances, and overall economic growth are becoming increasingly pronounced. This dynamic is contributing to a stronger US dollar, while the euro struggles to maintain its momentum.

Technical Analysis of EUR/USD

From a technical standpoint, the EUR/USD pair is showing signs of potential decline. After a brief rally, the lack of follow-through suggests that traders who initially bought into the bullish signal may be looking to exit their positions. The pair has formed a hammer candle, indicating indecision, and has slipped back into its established range. A test of the 1.1500 level appears increasingly likely, with protective stops likely positioned just below this psychological barrier.

Future Outlook

If the EUR/USD breaks below the 1.1500 level, there is minimal support until the August low of 1.1391, which could become the next target if bearish momentum accelerates. Traders should remain vigilant for increased volatility in risk assets, particularly if geopolitical tensions in the Middle East worsen.

Conclusion

The current market environment presents significant challenges for the euro and risk assets, with downside risks remaining prevalent. The interplay between rising oil prices and geopolitical developments will be crucial in shaping the future trajectory of the EUR/USD pair.